1. Warm-up: Wednesday
Write down 3 characteristics of the economic system you studied yesterday.

2. Economic Systems

3. Economic geography deals with how people earn a living and use resources.
Today, we will learn about 3 types of economic systems that are used in different countries.

4. Economic Systems Command (Free) Market Traditional (Planned) Communism
Socialism
(Free) Market
Capitalism
Traditional

5. Important Note:
No country has a pure market, command, or traditional economy. Most places have mixed economies.

6. Economic Questions What and how many goods/services will be produced?
How will these products be produced?
How will the products be distributed?
Where are these economies located?

7. Market Economy What and how many goods/services will be produced?
People (consumers) determine what and how many products will be produced based on buying power and lack of buying power.

8. Market Economy 2. How will these products be produced?
Based on consumer needs. (Goods produced by private industries and limited government involvement.)
Free enterprise = lets competition among businesses determine the price of products

9. Market Economy 2. How will these products be produced?
-Commercial Agriculture
-Commercial Industries: Goods are mass-produced in factories for sale by businesses to consumers

10. Market Economy 3. How will the products be distributed?
Based on consumer needs and supply and demand. People freely choose what to buy and sell.

11. Market Economy 4. Where are these economies located?
United States, throughout Europe
Most of the world’s rich countries (developed) have market economies

12. Example of a market economy:
Capitalism - businesses, industries, and resources are privately owned

13. Which is a central characteristic of a free market economy?
The government owns the means of production
All wage earners are paid the same amount
Labor unions are prohibited
Businesses are driven by the desire for profits

14. Command Economy
Government planners answer ALL economic questions. Government planners determine what will be made, how much workers are paid, and how much things will cost.

15. Command Economy 4. Where are these economies located?
China, Cuba, North Korea

16. Example of a command economy:
Communism - the government owns or controls almost all the means of production

17. Farmers Government officials Consumers Business leaders
Which group has the greatest influence in determining what goods and services will be produced in a communist economic system?
Farmers
Government officials
Consumers
Business leaders

18. Important Note:
No country has a pure market or command economy, but instead lies somewhere on the spectrum between the two. Around the middle, you have Socialism

19. Socialism
Falls between Communism and Capitalism in terms of government control.
Some industries may be government owned, other businesses are privately owned.

20. Socialism Taxes are generally very steep
Many social services are provided free: education, health-care, child-care, etc.
Both France and Sweden are examples of Socialist economies.

21. In a socialist economic system, the government—
Has little say in what goods are made
Does not influence the distribution of goods and services
Guarantees all consumers a high income
Often owns major businesses

22. Lesser developed countries tend to practice an entirely different economic system…

23. Traditional Economy (subsistence)
What and how many goods/services will be produced?
The goods produced are the essentials to survive: food, clothes, etc. People usually only provide enough for themselves and their family.

24. Traditional Economy (subsistence)
How will these products be produced?
Families produce what they can based on the resources available to them.
Generally, people do what their ancestors did. These customs have been carried down from one generation to the next.

25. Traditional Economy (subsistence)
How will these products be produced?
-Subsistence Agriculture
-Cottage Industries: Goods are made by hand in homes or small workshops for family or local use.

26. Traditional Economy (subsistence)
3. How will the products be distributed?
Goods are distributed among the family. There is little surplus or exchange of goods. As a result, there are few markets (places to buy and sell things).

27. Traditional Economy (subsistence)
4. Where are these economies located?
Poor countries (developing countries) and rural areas
Examples: Many countries in Africa, Central and South America

28. Which statement describes an aspect of a traditional economy?
Profit motivates individuals to set up private businesses
The interplay of supply and demand regulates prices
Tradition and customs greatly influence economic decisions
Government directs and controls the means of production

29. Traditional Free enterprise Socialist communist
In Indonesia, the government owns large industries and sets some prices. However, private businesses are also encouraged and several hundred are actively traded on the Indonesian Stock Exchange. This country’s economy system can best be classified as—
Traditional
Free enterprise
Socialist
communist

30. Which is a major feature of an economy based on subsistence farming?
Most adults work outside the home
Farmers compete with each other
Farmers raise just enough crops for their family to survive
The government decides which crops will be grown

31. Types of Economic Systems Characteristics of a Free Enterprise Economy
Which heading best completes the partial outline below? I. _____________________ A. Interaction of Supply and Demand B. Profit Incentive C. Entrepreneurs
Types of Economic Systems
Characteristics of a Free Enterprise Economy
Structure of a Socialist Economic System
Cottage Industries